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College Presidents and Merit Pay

I just spoke to a university president who mentioned he was due for a year-end bonus last week as a result of increased graduation rates. I was pleased for him, as I believe in salaries matching production. It’s so American. It’s the free enterprise system.

photo credit: Christopher Chan via photopin cc

photo credit: Christopher Chan via photopin cc

Later, I had second thoughts. I began to wonder if this idea of merit pay in the world of education is really in the best interests of students. It may be…but I have to tell you, I’m asking the question.

There’s a growing number of college presidents whose pay is now tied to results like graduation rates, retention, GPA and producing students that employers want to hire. It is part of their incentive package. In principle, I fundamentally agree with this idea. No one should be paid just for keeping a job, but for doing a job. And I believe that means producing results.

John O’Donnell, president of Massachusetts Bay Community College, agrees. “College presidents need to be accountable,” he says. His board of trustees recommended that on top of his $211, 150 salary, he should receive a bonus to reward good student performance. Stephen Pollack, a partner at the Mercer consulting firm, confirms this idea: “Institutions can’t afford not to have competent people in these jobs.”

Historically, educational institutions have made presidential evaluations a formality, and raises are frequently just “rubber stamp” actions from a board of regents. Much like faculty, it was about tenure and being liked. It was an art, not a science.

But, as Bob Dylan sang back in the 1960s: ”The times, they’re a changin’…”

My Take…

My guess is, some universities are using this plan as a way to justify extravagant salaries, because legally, you cannot tie salary to fundraising in non-profit work. For others, it’s a way to put a president on trial, where they lower their financial risk for a non-producing leader but can reimburse a high-producing leader. In any case, it’s an improvement. The old way allowed faculty, donors, alumni and students to weigh in, and it just got ridiculous. In fact, it created presidents who wouldn’t take risks.

Today, about one third of presidents at private colleges and universities are eligible for so-called variable pay, or pay for performance, according to executive compensation consulting firm Yaffe and Company.

My concern is simply this. While I love the idea of merit pay within education, it has backfired a number of times. Obviously they want results, but too often in the world of schools, educators find loopholes and artificial ways to get their numbers. As a result, the students suffer. Take the Atlanta Public Schools fiasco two years ago. When schools got money based on student performance, principals and teachers began cheating, changing the test scores just to hit the target. In the end, the children were the only ones who suffered, being passed along and even graduating unready for the world that awaited them.

I realize this is apples and oranges, to compare K-12 schools to colleges. But humans run both institutions, and we always seem to find a way to get what we want, even if the end user suffers.

I’ve got to believe there’s a way we can both pay for performance and ensure that students actually learn and earn what they get in the end.

Weigh in on this. What are your thoughts on the solution?


  1. lynabeth on January 27, 2014 at 7:34 am

    I work in a state (Missouri) where graduation rate is figured into the school certification process. Three years ago, our district changed principals and made part of his job to increase graduation rate. Our math EOC scores have gone down dramatically over the last 2 years but our graduation rate is increasing. Our young teachers are scared not to pass students for fear of loosing their job but what happens when the principal goes to them in the future and states that the school board is not happy with their students EOC scores.

    • Tim Elmore on January 27, 2014 at 1:53 pm

      I am sorry to hear that, Lynabeth. Your story reminds me of the what happened here in Atlanta. Hopefully some of your district leaders see soon what is really going on.

  2. John Meese on January 27, 2014 at 7:34 am

    I agree, Dr. Elmore, this is something to be wary of. At MTSU, where I got my undergraduate degrees, the culture of “More students graduating!” meant that the general quality of education was increasingly poor, so that lower-skill students could have the “opportunity” to pass along with the rest of the student body. What this meant was that hard-working students often felt like they were missing out, and once we graduated myself and many of my classmates discovered that our degrees were essentially useless.

    • Tim Elmore on January 27, 2014 at 1:54 pm

      That breaks my heart, John. Thank you for sharing.

      • John Meese on January 28, 2014 at 8:16 am

        Of course! It’s a sad state of affairs, but—again—when the focus falls on the means (a degree) rather than the end (skills & knowledge), it’s a recipe for failure.

  3. Malcolm Tyree on January 27, 2014 at 10:09 am

    When it comes to compensation and accountability in education, I think it should involve the following:
    1. Student performance – this based in part on standardized evaluations but also on performance based outcomes through projects and classroom participation.
    2. Peer Evaluation – educators know the impact of other educators. Because there are humans in our systems, some will coast, some will slack, some will meet the standards, and some will excel. Colleagues know who is who in this. When we remind each other that we are in this together there is the potential to see everyone improve.
    3. Supervisor’s Evaluation – outside accountability is required in all situations. The supervisor is able to take into account the other variables that influence the success of an initiative.

    • Tim Elmore on January 27, 2014 at 1:56 pm

      Thank you for sharing, Malcolm. You bring up some great points that could help school systems improve.

  4. Lawrence on January 27, 2014 at 1:19 pm

    Tim – You’re post is another wonderful one. Given the fundraising pressures in higher education, one of your statements stood out: “..legally, you cannot tie salary to fundraising in non-profit work.” I serve on the board of an alumni association and we’ve discussed providing compensation that ties back to the development work of our Executive Director. While we have chosen another path, it was our understanding that it was legal. However, it is generally frowned upon in the not-for-profit space. (Mission first, the dollars will follow.) Do you have additional information on this?

    • Tim Elmore on January 30, 2014 at 11:11 am

      Sorry for my lack of clarity. What I was referring to when I spoke of tying salary to fundraising work was that a person is not supposed to be given a commission or bonus based on the money they raise. I was told this by a CPA who explained how it could muddy the waters if donors knew the person asking for money was getting a “cut.” Salary can definitely be aligned with how well the donor development officer gets the job done. Apologies for the confusion.

  5. Brad Kendrex on January 28, 2014 at 6:15 am

    From my perspective, the fundamental challenge of performance pay in higher ed is not whether to do it, but rather what to measure as “success,” thus avoiding the short-sighted gaming. The policy conversation nationally focuses on retention and graduation rates, however formal completion and GPAs are only a few signals of whether the college is doing its job, especially at the community college level where students’ goals for attendance are frequently not completion of an Associates degree (despite what they may say for financial aid purposes).

    As Malcolm suggests above, a stool with more than one or two legs makes far more sense if you’re trying to incentivize risk and progress and focusing on a broader set of goals may help create better-rounded results.

    • Tim Elmore on January 30, 2014 at 11:14 am

      Thanks for weighing in, Brad. I agree, as long as we keep the end goal, the end goal – preparing students for their future.

  6. Daniel Karkoska on February 3, 2014 at 3:45 pm

    It is near impossible to insulate measurements and standards from fraud when incentives are present. However, without incentives, as you addressed in your article, there is less drive to excel, to improve.

    What, then, can be done to improve the evaluation process?

    I have long believed the education system is measuring the wrong things when concerned with overall life ‘success’ for their students. Fundamentally, there needs to be a change. We must begin with the end in mind. The end, in my opinion, is leading a fulfilling and satisfying life. Does that require a college degree? Possibly. But not for everyone.
    Therefore, my idea, first, is to change what and how we measure success. Are kids in districts or universities who have ‘higher graduation rates’ actually becoming employed? Would ‘college success’ (i.e. graduation/gpa) be better measurements for high schools and ‘hiring rates’ (including salary and job retention) be a better way to evaluate universities?

    Understandably, this would involve more than a simple survey. This would require a different approach and timeline. But, like the Growing Leaders Foundation initiative in poverty stricken schools, it is one idea for improvement; one I believe is worth exploring.

    • Tim Elmore on February 5, 2014 at 10:07 am

      Thank you for sharing, Daniel! I love your willingness to explore new ways to measure success in education.

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College Presidents and Merit Pay